Financials Under Pressure On Fallout From UBS Takeover Of Credit Suisse

Regional equities started the day on a more positive footing, but this has given way to a more cautious tone as the session progressed. China is the only major regional market to be sitting in positive territory at this stage. Developments outside the region remain key, following the UBS takeover of Credit Suisse. EU futures were up +1.4% in early trade, but now sit comfortably back in the red, while US futures aren't too far away from flat, also giving up earlier gains.

• Financial stocks have been a particular focus point as holders of risky (AT1) Credit Suisse bonds reportedly face a $17bn wipeout. Similar bonds for regional bank names today have traded sharply lower with the region. This has weighed on Asia Pac financials, with a Bloomberg large & mid cap index for the sector off by nearly 2%.
• The HSI is off by over 2.5%, with the underlying tech sun-index down by ~3%. Weakness has also been evident in financials, with HSBC down sharply.
• China shares are modestly positive, being viewed as insulted somewhat from the global turmoil, while the RRR cut from late on Friday is also a positive at the margins. The CSI 300 is up 0.10-0.15% at this stage.
• In Japan, the Topix is off by around ~1.40%, with the underlying bank index off 1.90%. The Kospi (-0.64%) and Taiex (-0.29%) have fared slightly better.
• The ASX200 is down near 1.40%, with financial names again under pressure, with lower commodity prices also likely weighing on material stocks.
• In SEA, we are seeing modest outperformance from Thai equities.